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Related Flashcards
Related Topics
Cards In This Set
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In what ways does ABC differ from Traditional costing
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1.Nonmaufuring and manufacturing costs are assigned may be assigned to products.
2.some manufacturing costs may be excluded from product costs 3. numerous overhead pools are used |
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Activity Based Costing Defination
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Costing method used to provide managers with cost information for strategic and other decisions that potentially affect capacity, therefore fixed as well as variable costs
determines the entire cost of a product rather than just the manufacturing cost multiple cost drivers or cost buckets used to supplement another costing system |
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Aims to reduct or eliminate non value added activity
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ABC
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What is not allocated to cost products?
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Organization sustaining
customer idle (excess) capacity |
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Which of the 5 levels do not relate to the volume of units produced?
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Batch
product customer organization-sustaining |
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Unit level
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Performed each time a unit is produced.
the costs should be proportional to the number of units produced |
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Examples of unit level activities
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Providing power to run processing equipment
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Batch level
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Performed each time a batch is handled or processed regardless of how many units are in the batch
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Batch level examples
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Placing purchase orders
setting up equipment arranging for shipments to customers |
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Product level
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Relate to specific products and typically must be carried out regardless of how many batches are run or units are produced/sold
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Product level examples
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Designing a product
advertising a product maintaining a product manager and staff parts product design |
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Customer-level
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Relate to specific customers, not tied to any specific product
not allocated out-- charged to customer |
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Customer-level examples
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Sales calls
catalog mailings general technical support |
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Organization-sustaining
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Carried our regardless of which customers are served, which products are produced, how many batches run, or how many units made
not allocated out |
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Organization-sustaining
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Heating factory
cleaning offices providing computer network arranging for loans perparing annual reports HR adminstrative |
